Wood v. Board of Supervisors

The case of Clark v. Sheldon, ( 106 N. Y., 104 ; 8 N. Y. State Rep., 537), determined that the acts of 1869 and 1871, are constitutional in all their provisions, and the interpretation which was given the same by the court of appeals in that case determines many of the legal questions presented by the parties on the arguments of their respective appeals.

Both the defendants contend that if the plaintiff is entitled to the relief awarded by the judgment, the same can only be granted by the county judge of Monroe county on a petition of the tax-payer of the town of Hamlin, in the manner prescribed by section 1, chapter 283, of the Laws of 1871, relying in support of this contention on the legal proposition that, when a statute creates a new right unknown to the common law and gives the remedy, he who' would claim the right of the statute must pursue the remedy given by it, and that such remedy is exclusive.

■ The procedure prescribed by the statute is limitéd to cases where the taxpayer complains against the county treasurer that he has neglected the duty imposed upon him by the statute. The right which the plaintiff is seeking to enforce is a property right given by the statute, for a violation of which the injured party is entitled to relief by action, either legal or equitable, as administered by the laws of the state in force at the time the right to have a tax applied to the purpose mentioned was granted. The right of the _ plaintiff to compel the county to account for moneys which it has wrongfully applied to its own use, in which the town of Hamlin was interested, was not created by this statute, but had its foundation in prior statutes of long standing as well as in the precepts of the common law. The principle contended for would apply only in favor of the party against whom the new right was created. It certainly could not be invoked by a wrongdoer as against a party whose right under the statute had ripened into a vested interest. Bridges v. Board of Supervisors of Sullivan C ounty, 92 N. Y., 578 .

This limitation of the rule makes it clear that neither defendant can appeal to it for the purpose of defeating the plaintiff’s demand for relief in this action. In accordance with these views we have held in the case of Vinton v. Board of Supervisors of Cattauraugus County, decided this term, that the remedy given by the statute was not exclusive but cumulative only.

The objection is also made that this action cannot be prosecuted by the plaintiff as supervisor, but should have been brought in the name of the town. We think it is well settled that the supervisor may maintain an action of this character in his name as supervisor. Bridges v. Supervisors of Sullivan County, 92 N. Y., 570 ; Sutherland v.

The recovery embraced that portion of the tax levied on the railroad property which is designated in the case as the state tax which would have been properly' payable to the state treasurer by the county treasurer except for the provisions of the said act, which applies the same to the redemption •of the town bonds. The learned trial judge in allowing a recovery for the state tax gave as his reason, in his written opinion with which we are favored, that the amount of state tax which is levied upon the taxable property of the county is made a charge against the county and is a debt due from the county to the state, and is made so by statute, so that when the county treasurer made a remittance to the state treasurer of the amount of the state tax, it was in fact in payment of a debt due from the county, made at the request of the defendant by its authorized agents, and it is liable to the plaintiff on the same principle" that it is liable for the county tax misappropriated to its use.

In support of these views we are cited to the provisions of the second Revised Statutes, p. 1020, section 8; p. 1022, section 25, 7th edition. If when the state tax was remitted by the county treasurer to the state treasurer the county of Monroe was in any proper sense a debtor to the state to the amount of the state tax authorized to be collected from the taxpayers of the county of Monroe for the several years mentioned, then the county has had the benefit of the money for which a recovery was had, and in justice and equity the county should restore the money to the fund from which it was wrongfully taken with its consent. The state collects taxes for state purposes through the operation of general laws acting directly upon the taxpayers. The law makes it the duty of the county treasurer to pay such taxes directly to the state treasurer. In doing so the former does not act as the agent of the county, but he performs that duty as a public officer as directed by certain general statutes. People ex rel. Lawrence v. Board of Supervisors, 11 Hun, 306 ; People v. Williams, 3 Sup. Ct. R. (T. & C.), 338.

The legislative action, as found in the laws of each year during the period in question, may be referred to in support of this proposition. In one of the enactments the language is as follows: “There shall be imposed for the fiscal year "* * * on each dollar of real and personal property of this state, subject to taxation, taxes for the purpose hereinafter mentioned, which taxes shall be assessed, levied and collected by the annual assessment and collection of taxes for that year in the manner prescribed by law, and shall be paid by the several county treasurers

The board of supervisors in each county is empowered and required to spread the tax authorized to be levied upon the taxable property within the county, the legislature making that body an auxiliary instrument in carrying out its own scheme for raising money for state purposes. The board of supervisors had no power or authority conferred upon it to determine the amount of the tax to be levied, nor when nor to whom it shall be paid, nor the use and purchases to which it shall be applied. The money realized never passes under the control of any official of the county, who, in receiving the same, acts for or represents the county in its municipal capacity.

In support of the argument that the county becomes a debtor to the state for the amount of taxes annually assessed upon it by the comptroller, reference has been made to the Laws of 1865, chap. 427, 2 R. S., 1020, § 8, 1022, §25. Section 8 provides that “the comptroller shall, from the annual returns made to him of the valuation of the real and personal estates, in the several counties in the state,' charge the several county treasurers with the amount of the state taxes, if any, to be raised in their respective counties, crediting them with their own fees.” The comptroller is not authorized to charge the amount of the tax authorized to be levied and collected, to the county, but the account is to be kept with the county treasurer, who is required to account to the comptroller for the moneys which may come into his hands from the several town collectors. The other section referred to (25) makes the county a surety for the losses which the state may sustain in consequence of the defalcation of the county treasurer. The provision is as follows: “All losses which may be sustained by the default of the collector of any town or ward, shall be chargeable upon such town or ward. All losses which may be sustained by the default of any treasurer of any county in the discharge of the duties imposed by this act, shall be chargeable to the county. And the several boards of supervisors shall add such losses to the next year’s taxes of such town or county.” It is the losses which are to be charged to the county, not the amount of tax authorized to be levied on the taxable property of the county. The precise question has been decided adversely to the views of the plaintiff in the case of the National Bank of Ballston Spa v. The Board of Supervisors of Saratoga County ( 106 N. Y., 488 ; 11 N. Y. State Rep., 150). The question was there presented whether the county was indebted to the state for

And the court in commenting upon the statute, remarked: “ There is no provision for payment out of the general funds of the county, nor does the statute imply that the amount of a tax once paid, shall be collected a second time from the taxpayers until the statutory remedies shall have been exhausted against the delinquent treasurer and the just balance ascertained.” A similar question to the one now before us is presented in Bridges v. Supervisors of Sullivan County ( 92 N. Y., 571 ), and it was held that the county was not liable for the diversion of moneys made by the county treasurer in paying the state tax to the state treasurer. The plaintiff has failed to show that the defendant has received or had the benefit of that portion of the state tax which was misapplied by the county treasurer, by remitting the same to the state treasurer, which he should have invested for the town of Hamlin. The county can only be liable in this form of action for moneys which have come to its treasury for its own use, of which it had or might have had the benefit. To this extent the judgment is erroneous.

Such portion of the tax as was levied on the railroad property during the several years in question, as its portion of the town tax raised for the purpose of paying the annual interest on the bonds and to redeem such of them as matured, was properly deducted and not included in the recovery. In terms, the act of 1871 directs that all taxes, except school and road taxes, collected on the assessed valuation of all railroad property in any town which has issued bonds to aid in the construction of such road, shall be paid over to the treasurer of the county for the purpose mentioned in the act. That portion of the tax has been applied to the purposes for which it was intended and both the town and the bondholders have the full benefit of the tax.

The appellants in their joint answer set up the statute of limitations as bar of a recovery for all taxes paid over to

The plaintiff contends that the statute of limitations does not bar a recovery in view of the facts of this case, as each defendant is, as he insists, a trustee of the fund, created by the provisions of the statute. On no other ground can the argument be supported that the statute does not bar a recovery as to the tax for the several years disallowed by the decision of the special term.

It is well settled that the statute has no application to a direct and continuous trust, and matters of controversy between the trustee and the cestui que trust concerning the trust, until the trustee has openly, to the knowledge of the beneficiary, renounced, disclaimed, or repudiated the trust. Kane v. Bloodgood, 7 Johns. Ch., 90 ; Lammer v. Stoddard, 103 N. Y., 672 ; 4 N. Y. State Rep., 225 ; Matter of Neilley, 95 N. Y., 382 .

The first inquiry, then, is, did the county treasurer receive the tax as a trustee, within the legal sense of that term, so as to preclude him from claiming the benefit and protection of the statute. We are inclined to the opinion that he did, and that he was precluded from setting up the statute, and thus defeat the relief to which the .plaintiff is otherwise entitled to as against him. In addition to the ordinary mode of creating trustees, they may be appointed by special act of the legislature for the purposes mentioned in the statute creating the trust. Trustees thus created do not materially differ from other trustees in the powers which they possess, and the manner in which they shall discharge their duties; and they are equally amenable to the jurisdiction of courts of equity. Hill on Trusts, 64. (m. p.)

The tax paid to the treasurer is to be invested as a sinking fund for the benefit of bondholders and the town issuing the same. The fund does not come into his hands by the terms of any contract, express or impled. The relation of debtor and creditor does not exist between himself and any other person, municipality, or corporation. The manner and "mode of investment within certain fixed limits is left to his discretion, and the time when the fund shall be paid out and distributed among the beneficiarcies is altogether uncertain and contingent. The funds came to his hands for no other purpose than the one mentioned in the statute, and they cannot be lawfully diverted therefrom, and must be held and invested as therein directed.

_ All parties interested in the breach of trust are equally liable, without regard as to priority as between them, and this liability, is joint and several, and they may be joined as defendants in a suit relating to a breach of the trust. Hill on Trusts, M. P,, 520, 521; Hanson v. Worthington, 12 Md., 418 .

In Rolfe v. Gregory (4 DeGex, J. & S., 577), the rule is formulated as the same is applied in the English courts as follows: “A fraudulent abstraction of trust property by the trustee, and a fraudulent receipt and appropriation of it by another person for his own personal benefit, places the receiver in the same situation as the trustee from whom he receives it, and he becomes subject in a court of equity, to the same rights and'remedies as maybe enforced by the parties beneficially entitled against' the fraudulent trustee himself, and when it is said that the person who receives under such circumstances, is converted by the court into a trustee, the expression is used for the purpose of describing the nature and extent of the remedy against him, and denotes that the parties entitled beneficially, have the same rights and remedies against him, as they would be entitled against an express trustee, who had fraudulenly committed a breach of trust.” See, also, Wilkinson v. Dodd, 2 Cent. Rep., 245 (N. J.).

The county was properly joined as defendant in this action, and may be required to account for the funds wrongfully received from the trustee.

The trial court held that the provisions of the statute barring the right of action in six years was applicable to the facts of this case. In this conclusion we concur. The only relief demanded against the county was a money judgment based on the alleged fact that it had illegally and unlawfully applied to its own use the trust fund. As against this defendant the judgment is in effect for money only in an amount sufficient to indemnify the beneficiaries against loss arising from the devastavit of the fund. The action against the county is of the class and character mentioned in subdivision 3 of section 382, which provides that an action to recover damages for an injury to property or a personal injury, except in a case where a different period is expressly - prescribed, must be within six years from the time when the act was done which creates the liability. Neither the allegation in the pleadings nor the findings of fact make a case within the provisions of the fifth subdivision of section 382.

The subdivision provides that in an action to procure a judgment other than a sum of money on the ground of fraud, in a case which, on the 31st day of December, 1846, was cognizable by a court of chancery, the cause of action is not deemed to have accrued until the discovery of the fraud.

It was held by the court in Miller v. Wood ( 41 Hun, 600 ), that that provision has no application to a case in which, as here, the only relief sought is money judgment by way of compensation for damages. In support of this position

It cannot be fairly said that the ground on which this action rests is fraud. In reaching this conclusion we have nothing to guide us but the pleadings and the facts found.

We have not considered the question for the purpose of deciding it, whether the plaintiff must make a case of active and intentional fraud on the part of the defendant, to bring the case within the fifth subdivision of section 382, or whether a case of legal or constructive fraud, not involving any moral delinquency on the part of the defendant, is sufficient to prevent the running of the statute until the injured party has notice of the acts which constitute the fraud.

We are unable to modify the judgment and correct the error, by deducting the amount of the state tax, for the reason that both the state and the county tax are stated in a gross sum, and we have before us no data by which they can be separated.

The judgment against the county treasurer is limited, and he is only required to invest the moneys directed to be paid to him by the county for the purpose, and in the manner required by the statute.

We pass without considering our own suggestion, whether it is not appropriate, in this action, to require the county treasurer to account for the moneys paid to him in the year 1879, and which he misapplied, and also requiring him to invest the moneys in his hands, paid in the year 1886.

These questions may arise on another trial.

The judgment reversed, and the costs of this appeal to abide the final award of costs, unless the parties stipulate the amount of the state tax and interest thereon included in the judgment, be deducted therefrom; then in that case, the judgment be modified accordingly, and as so modified, affirmed, without costs of this appeal to either party.

All concur.